FURTHER PETROL PRICING PROBE PLANNED IN NZ

FURTHER PETROL PRICING PROBE PLANNED IN NZ

Earlier this year, the New Zealand Energy Minister (then the Hon Judith Collins MP) commissioned an investigation into retail petrol prices around NZ. The investigation team reported mid-year, concluding that there was evidence to suggest that retail prices were not reasonable.

Since then, there has been a chance of government. The National-led coalition government which had been in power since 2008 has now been replaced by a coalition consisting of the Labour, Green and NZ First Parties. The new Energy Minister, Dr Megan Woods, this week released a further report she had received from her officials in connection with the path forward.

That report was prepared by the Ministry of Business, Innovation and Employment (MBIE). It considered three principal options:

Status quo (i.e. no government intervention).

Instruct the Commerce Commission (the NZ equivalent of the ACCC) to conduct a market study and potentially propose further regulatory intervention. That intervention would likely require new legislation.

Direct government intervention now. The precise form of that intervention was not specified in the report.

MBIE recommended option 2 as the “preferred vehicle” for carrying out further examination of the sector. The government has indicated that it accepts that recommendation.

However, there is likely to be a substantial delay before any market study even commences. Presently, the Commerce Commission has no statutory power to conduct market studies. Parliament is unlikely to pass the necessary enabling legislation before June 2019. Any subsequent legislation intervening in the sector as a result of market study recommendations would take a similar period to pass through Parliament.

“A market study is likely to give the NZ public much greater clarity than presently as to pricing in the retail petrol market” said Andy Glenie, a competition and regulatory lawyer in Auckland. “However, such an exercise will be very expensive and is unlikely to result in any direct regulatory intervention taking effect before 2021.”